US Food Companies Collaborate to Increase Supply of Organic Grain

Many of the countries’ largest organic food companies are working together to overcome a shared challenge: how to increase the supply of organic grain. This group has recently made some headway.

At the surface, the challenge can seem a puzzle. Organic supply is unable to meet current demand, let alone projected growth. The organic premium is nearly triple the price for conventional grain (the average price for delivered organic corn as of November 1st, 2015 was $9.36/bushel and only $3.46/bushel for conventional corn on the Chicago Mercantile Exchange (CME)). Yet organic farmers are not expanding production, and conventional farmers are not seeking to take advantage of the organic opportunity.

The US Organic Grain Collaboration was formed to solve this puzzle. With facilitation from the Sustainable Food Lab, a number of leading companies including Annie’s, Organic Valley, Clif Bar, Grain Millers, Stonyfield, Nature’s Path, Pete & Gerry’s, General Mills, and Whole Foods, share in the leadership of this collaboration.

One reason for the mismatch between supply and demand is simply that the demand signal is not getting to farmers. During a March 2015 “listening session” with Aroostook farmers and local processor partners, the collaboration discovered that market access was a challenge in the county. One grain-grower said, “We need to hear from buyers, not just that they will take our grain, but how much, and at what specification. It’s not enough to come here and just say generally that you want more organic grain.”

In response, the collaboration organized an Organic Grain Promotion Day in Aroostook County, Maine for more than 65 organic and conventional farmers, processors, and buyers of organic and non-GMO grain. The event allowed participants to share information about organic market opportunities, support grower-buyer networking, and identify areas where the collaboration can support the development of organic grain supply in Aroostook. In addition to clear market demand, post-harvest handling and storage, and transportation logistics also emerged as barriers for getting the highest quality grain shipped to markets.

During the event, Kellee James, CEO of Mercaris, a market data service and trading platform for organic and non-GMOagricultural commodities, summarized the size of the opportunity and the demand. “Year to date, total organic corn imports have reached 5,202,698 bushels which is an increase of 752% versus last year. If the current pace continues throughout the year, imports could reach 31,216,188 bushels.”

James’ points:

Demand for organic crops continues to grow.

Animal feed markets are the majority of demand.

It’s easiest to market cash crops (corn & soybeans).

However, there are ways to market organic rotational crops through advance planning.

In addition to clarity on demand, the collaboration has found that farmers need technical assistance with specific expertise in the crop rotations necessary to make organic grain production profitable. This emerged most clearly at a summer engagement session hosted by the grain collaboration for farmers in North Dakota. The growers said that lack of extension support was a major challenge. One grower said, “We have all the storage tanks we need and we know where to sell our grain, what we need is a coach; a reliable, un-biased expert who can answer questions about more than just conventional corn, soybean, and wheat crops.”

In response, the collaboration worked with the Organic Trade Association, Grain Millers and Hesco (SK Food International), to deliver a proposal to the state legislature to fund two new extension positions with specialized expertise in crop rotations, both organic and conventional. The North Dakota Organic Advisory Board, organic farmers, and Pulse Growers association formally delivered this proposal and provided testimony in Fargo on November 12. The 2016 legislature will vote on the proposal.

Pacific Northwest Grain Pilot

In the pacific northwest, Nate Lewis, with the Organic Trade Association (OTA) and US Organic Grain Collaboration, hosted an engagement session for growers and other regional and national supply chain partners at the Washington Tilth Producers Conference in Spokane. This session was designed as a scoping opportunity to better understand where the collaboration can support improving the productivity and profitability of organic grain farming in the region.

Growing the collaboration

The US Organic Grain Collaboration is a pre-competitive industry collaboration focused on improving the productivity and profitability of the organic grain farmer. The US Organic Grain Collaboration has received approval from the Organic Trade Association Board to become a project of a newly-formed OTA Sector Council. It will now be co-managed by both OTA and the Sustainable Food Lab.